Have your parents thought about inheritance tax?
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It's amazing how many people I've known who have saved all their lives etc for "their old age" yet actually won't spend it when needed.
A friends mother in law is worth a lot of money and is 79 years of age yet has suffered for years whilst waiting for a hip replacement because the cash she has in the building society is "for my old age" ...... wtf?
This aforementioned lady also has more £ coming in per week in pension than most joint income couples!
As far as my friend and his wife can ascertain the lady has not made any provision to avoid inheritance tax either so a very large amount will go to the treasury when she eventually does pass on; absolute madness!
A friends mother in law is worth a lot of money and is 79 years of age yet has suffered for years whilst waiting for a hip replacement because the cash she has in the building society is "for my old age" ...... wtf?
This aforementioned lady also has more £ coming in per week in pension than most joint income couples!
As far as my friend and his wife can ascertain the lady has not made any provision to avoid inheritance tax either so a very large amount will go to the treasury when she eventually does pass on; absolute madness!
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well maybe I am wrong, but anything you inherit over 275k, and within 7 years of receiving said money/items, you have to pay 40% on that above value.
will this not have an effect on most average (i use the term loosly) family setups?
If my grandad dies, and his house is left to my mother. the house is worth more than the threshold. anything above the 275k mark the government will take 40% in tax.
regardless of wether the item is sold or not, the receiver of the goods has to pay that.
so far I think I am right. Would this not have an effect on anyone that has family that will at some point die, and own a lot of assets?
gonna re-read the whole post now see where I went wrong.
I did also say that this isnt a nice subject!
will this not have an effect on most average (i use the term loosly) family setups?
If my grandad dies, and his house is left to my mother. the house is worth more than the threshold. anything above the 275k mark the government will take 40% in tax.
regardless of wether the item is sold or not, the receiver of the goods has to pay that.
so far I think I am right. Would this not have an effect on anyone that has family that will at some point die, and own a lot of assets?
gonna re-read the whole post now see where I went wrong.
I did also say that this isnt a nice subject!
lozza23_uk said:
Very loosely I'd say.. you think most average households are worth £275,000? I don't. Also you just said that inheritance tax would affect everyone at some point in their lives - as the OP says it's more like a third.
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Rotty said:
understood.
@ dirtydog. suppose you are right. I am just thinking in narrow terms of house values, savings, pensions etc.
edit 1: if you have a private pension the next of kin will get a chunk of money. this is counted as receiving an asset?
just a quick question.
lets say you inherit from 2 different sources (people) within a 7 year period.
what would be the scenario then?
edit 2:
also, in the current climate and fluctuation of house prices, many properties within a few years will be above the threshold.
how many years has it been 275k?
i am looking at buying soon. and 2 bed flats are 150k in my area.
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Not only would you have to pay 40% if the house is worth more than £275k, but you have to pay the tax first before you can inherit the house.
If you were in the position of not having the cash/get a loan to pay the tax the tax man will sell the house for you (usualy at auction at a knocked down rate). You can't sell the house first to pay the tax.
So, you parents work hard for their money and pay tax on it, they pay stamp duty etc (tax when they buy the house) so paying tax now twice on the same money and then if they die and the house is worth more than £275k they pay 40% tax AGAIN!!!!!
Outrageous...
If you were in the position of not having the cash/get a loan to pay the tax the tax man will sell the house for you (usualy at auction at a knocked down rate). You can't sell the house first to pay the tax.
So, you parents work hard for their money and pay tax on it, they pay stamp duty etc (tax when they buy the house) so paying tax now twice on the same money and then if they die and the house is worth more than £275k they pay 40% tax AGAIN!!!!!
Outrageous...
tmileson said:
To all intents and purposes it isn't your parents who pay the 40% when they've died, it's you who have inherited their estate who pays it. Just the same as if you earned an extra £275k in wages in a year, you would pay 40% income tax on it.
lozza23_uk said:
It will be decades before average house prices in the midlands and north are £275k. Even here in north Essex that is still well above average. And I am sure that the inheritance tax threshold will rise again in future years as it has risen already in the past.
This is the tax that makes me sick. Everything my parents have worked for, paying their taxes all their life.. and then for no reason at all other than to keep the next generation working it seems is to steal and yes it is stealing.. what they have earnt. It is disgusting.
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well, suppose its just something we have to deal with.
same as paying tax on earnings, then going to the shop and paying tax on goods.
same as paying tax on earnings, then going to the shop and paying tax on goods.
I think there is a case to be made for lowering the inheritance tax threshold personally. I don't see it as fair that the children of better off or wealthy parents should get a huge windfall when their parents die, which means they can then afford to buy their own property (or a more expensive one than they could otherwise afford) with money that they have not earned - when their peers don't have this advantage, and are faced with house prices out of their reach.
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Visage said:
when worlds collide. think my head just tried to explode thinking about this one.
i aggree.
but then, just from another point of view tax has already been paid on the earnt money, the earnt interest etcetc.
but then I suppose, if you count receiving the money from inheritance as earnt money (which you could) then paying tax on it falls in line with the way earnings tax works.
edit:
either you earn it and pay tax, or get given it and pay tax. seems fair.
interesting point.
Then what incentives do parents have for saving?dirtydog said:
One of the axioms of economics is that the rational consumer maximises their welfare, and this welfare is perpetuated through that of their children (and their childrens' children, etc.).
Is it fair that the children of the wealthy should subsidise those of the poor?
There is a case for inheritance tax, but I don't think that it hinges on any notions of fairness.
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Ive just forwarded this article onto my parents as they are both retired and ill hope they get the hint lol 
Soldato
My inheritance will be subject to Spanish Laws but I am aware that oth my parents have English and Spanish wills to make sure everything is covered for my sister and I. 
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so all thats needed is to bump em off?
Borris said:
It seems to perpetuate a system whereby the rich (or their offspring) get richer and the poor stay poor.
Thinking about it, I'd say the threshold should be close to zero. (edited for clarification)
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